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tv   Market Makers  Bloomberg  March 4, 2014 10:00am-12:01pm EST

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>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. bulletin dials it back --put in dials it back. -- and grimy and has a sigh of relief. >> missing the target. sales are slowing as fears of has been makers running for cover. >> will the makeover make a the breadsticks
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you know and love? all of gardenan enthusiast know matter what the logo was. i also want to say good morning to my son home sick. >> bp is on the hook for more damage payments or the mexico oil spill. abide by the terms of a $9.2 billion on the boat with the big woods of the disaster. tohad asked the court prevent payments to anyone who could not provide evidence that their losses were caused directly by the spill. president obama stuns his new budget to congress today. he wants to cut taxes for low income families, and increase spending on bridges, roads, and job training.
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expected toare block the president's budget and offer one of their own. secretary of state john kerry has landed in kia for talks about the future of ukraine. itsce on reducing dependence on russian natural gas, we ask mike to hear from both senator kerry and president obama. putinheard from vladimir for the first time since the outbreak of the prices -- crisis. ryan joins us now from kiev. how did you interpret vladimir putin's remarks? >> the main thing about 's presst putin conferences that we got a sense of what he is thinking. ultimately copy is the only person who knows where this conflict is going to go.
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for the take away was time being he has no intention to escalate things. he said several things during that press conference, one, he said that he saw no need to send troops into ukraine yet. that was a bit cryptic, because ukraine says there are already 16,000 russian troops in crimea. what he needs, i think, is beyond crimea. into eastern ukraine. he also said that russia has no intention of fighting a war with ukraine, and that russia would ,nly send troops into ukraine eastern ukraine, because they are already in crimea if there was an extreme situation. philly, he does not feel that that is the case right now. you do not think he has any intention of escalating the situation. de-escalated the situation. he never said that the russian
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troops would be leaving anytime soon, but we did learn that he has no plans to move into eastern ukraine. remember, as you said, these were the very first comments he has made since russia's intervention in the grade. obviously, a lot of people wanted to hear exactly what he is thinking. meanwhile, secretary of state ,ohn kerry arrived here in kiev and left some flowers for people who were gunned down in the violence in independence square. when the president was ousted, there was a huge gun battle, and he has been suppressing his -- expressing his support for the ukrainian people. thering aid, saying that united states will pony up $1 billion in financial assistance in the form of loan guarantees for ukraine. saying that we will do more. president obama is going to announce more.
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ides two secretaries there -- to secretary kerry said that he will be drawing up sanctions. i am not decided what they want to do yet, and they want to figure out what to do now that we have heard from president putin, suggesting he has no intention of escalating the conflict. >> thank you very much. in kiev.yan, global stocks are rebounding from the biggest drop in more than a month. , u.s. stocks3% have more than made up yesterday's losses which ultimately led -- amounted to less than one percent. let's tell you what is going on in russia. onlyan stocks have made up about 40% of yesterday's losses, the benchmark index dropped almost 11%, and is up about five
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percent today. we can look at the treasury market, gold, and oil, and give you a sense of the relief from the run for cover that we saw yesterday. it has in a wild today's for global markets for sure. our next guest is watching the with and turns their fully, as he always does. he is the chief equity strategist for goldman sachs back with us on bloomberg television. david, nice to see you. we were talking about potential catalysts for drawdown in equity markets. geopolitical risk was certainly one of them, as were emerging markets, where do you think we are with the possibility of a drawdown? >> we have had a major drawdown that took ways in late january, early february, around six percent. we have had a sequence of polar vortex, and pretty economic data
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that was -- i, data that was and somesappointed -- economic data that was pretty disappointing. there were a series of modest hiccups that we were seeing. i am dismayed that the market imbing to returns and a modest level. >> you're not changing your target, since we have seen a lot in the past couple of weeks? >> as expected we had modest increase in profits, and the economy is growing, not as rapidly as we hoped, but generally climbing. salesea of a growth in that is related to the economy, stable market, that will lead to a higher market trade the higher -- market. the market is trading at exceed times -- 16 times, so we need a catalyst to bring in higher. ofcan you give us an idea
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how much everest the events in ukraine posed to u.s. stocks right now? from anan learn it earnings perspective, or an evaluation. it is not a direct bilateral one on earnings, it will be moderately affected. with the evaluation of risk, that could be somewhat of a positive view as the equity markets see the stability of our system. it is probably not a big deal. what is much more significant in terms of the growth in china, for example, and some of the fundamental drivers there with terms of the overall impact on the u.s. economic growth. we dot is to say, even if see a selloff triggered by dispute between the united eighth and russia, people will
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realize that the economic states are notthat -- stakes that great in that part of the world >? >> the balance sheets of the u.s. corporations are very strong, there is a lot of cash flow, and companies are looking at returning it to shareholders and investing for growth. that is my forecast for the coming year. the overall market, trading at valley, and you think about the idea that introductory market earnings, there is an area to profit from that. hedge funds, from a historical basis, have tended to perform strongly in the long position. two thirds of the time, if you go back to 1999, the ownership of hedge funds tend to outperform. last year, the overall stock market was up 32% of and hedge funds were up 42% right >> why
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did they perform so poorly overall? >> anything on the short side of of the rising market, that would be more challenging. it has been historically a very strong performer at the end of the year. >> is that just because the market has gone up during the year? >> it is stock selection. the return is relatively low. there are fundamental reasons why those positions are owned. they tend to play out over time. you are looking for a way to invest in the market at this juncture where your trading at earnings. 16 times >> we will talk about those fundamental reasons to own stocks when we come back. david is the chief equity strategist at goldman sachs. >> plus, we're going to talk guns. shares seem to have lost their firepower. you're watching bloomberg
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television, live on bbg television and streaming on your phone, tablet, and at now on apple tv. ♪
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>> welcome back to "market makers." we're with david costas, the chief equity strategist at goldman sachs. before the break we're talking about different ways to outperform the market. what were some of your biggest takeaways, besides concentrated long seems to be the best way to outperform? >> we're looking at her stock market that reacharound fair value. we need to find an opportunity or some slices of the market that would be outperforming. we've been looking for the last 13 years at positions in the market that are very significant to the performance of a hedge fund. sachs' vipt goldman list.
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the stocks that many hedge funds have is among their largest physicians, the longest position. they'll outperform two thirds of the time. are examplesthose of committees that are in that basket. the s&p 500 was up around 32%, now it is a performing a party's doubly -- at a pretty steady level of outperformance. >> there is a difference, and i want to make sure that we understand it, between the very important position, the bip --v ip, and the concentrated position. >> when you think about it concentrated position, that is a stock when the hedge fund olives up to city percent of the shares outstanding. -- owns up to 60% of the shares outstanding.
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influencing the performance of those funds. >> they already own these positions, so if you're talking to in that potential investors, he has owned it all of the time. >> one of the interesting things is that the turnover has been declining but it's a for the past five years. the actual turnover, the stocks on this list, have tended to persist quarter after after quarter. it is owned for a fundamental reason. have a relatively low turnover. the persistence of owning these companies for fundamental reasons -- >> is this a change in the way stocks are held? >> the turnover is quite low, around 15% of the long position.
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ways an evolution, a better to distribute government has been going on for the past five years. about 15% of the largest additions -- positions owned by hedge fund turnover over quarter . that is a relatively low turnover, as to what many people perceive. >> the most concentrated versus lead concentrated, because the difference and disdain junior explained to us seems very intriguing. the very important positions, the vips had to perform out -- >> they tend to be larger in cap. highu wanted a concentration of you have smaller cap companies where the hedge fund group of funds would own a significant part of the shares. >> so when the market is rising of it is good to be worthy market shares are concentrated, and when it is not rising you want to be where his lead
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concentrated. that white line is ok and rough times, when the orange line is doing poorly. >> is risk on or risk off. you do not ownd, a lot of the stock of a there's not a lot of the selling pressure that takes place in that. that is one way of interpreting that fed analysis. backward looking though, it is all about knowing what they're going to do. >> the persistence of ownership in these positions is what makes it a forward-looking investment. that is why we have been doing this for the past of number of years. we have a significant amount of money that is tracking that, the isa that the turnover
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relatively low means that there is a persistence in ownership of these divisions. >> what does that mean have a significant amount of money tracking that? >> the people who like the idea of these indexes put money to work in the index is? >> i got it. >> following that as a strategy. we were talking about some investing strategies to capitalize on the market that is starting a fair value with modest appreciation. some of the market internals is really the challenge for financials. how ared look at as, companies spending their cash? how are they allocating their significant amount of cash flow to repurposing shares? be a winninged to strategy in the garment, you could look at companies with a high degree of operating leverage. the idea that the economy is getting better. they have entered results that are better.
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those are some strategies, coming back to the idea of the market trading around fair value. you need to be nimble and creative about ways to attack the market. >> then you do not have to take two and 20. thank you for joining us. >> we will be back in a couple of minutes on "market makers." investors are taking a second look at gunmakers, among them smith and weston. this year, investors do not like what they see. ♪
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>> you're watching "market makers."
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you will remember not too long ago that guns were selling at a record pace. --ers were rory. government were worried about government regulation. something is changed since then. gun stocks have fizzled. what is the story? >> there were no tragedies in the last year when it came to gun shootings. if you take a look at federal background checks, -- >> you said that with such a straight face. you're not cynical? >> i'm trying to deliver the facts. back projects are very well correlated to any sort of tragedy. the idea being that when a shooting happens, regulations and pressure comes, and people want to buy quickly because they are afraid of reaction from washington. gun stocks are no exception when it comes to that. you can see a longer-term trend
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tends to do well through some kind of shooting on the same lines. possible -- impossible comparisons for .eople to live up to >> it is still way off of its record high, but also way off of its record low. sadly, we'rell, going to see more tragedies of and we're going to see at some point in the future more calls for gun regulation restrictions, and maybe this very same buyer who rushed out last time will go and buy guns next time.uns >> it all depends on the regulations, with the ban on the high-capacity magazines. makeis what happened to fall off.g bal
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there's no reason why there cannot be some sort of normalization. come may, we should see it stabilize, nothing like 2013. that is me, shooting a gun, i'm actually a pretty good shot. this is my first time, i almost had a bull's-eye. >> that was your first time shooting? >> it was. >> does it give you a sense of why guns remains a popular? ask whattside the u.s. is our obsession, but it is not that different from fishing. you collect fishing rods because you like to have them. >> the wall nearest right to find new consumers. it is hard to know how many guns are actually sold. >> guns have been selling at over 30 years and over eight percent compound good >> just because they own one or two
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guns, that does not mean they will buy another one. that is were gun sales for women come in. it is a new group. >> fascinating. thank you. dekes alix steel is a sharpshooter in more ways than one. ♪
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>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> welcome back to "market makers." coast,hakeup on the west apple. the chief financial officer stephen oppenheimer will retire later this year. , editor,se expert , cory johnsonarge go. how big of a losses this?
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hast the peter oppenheimer been part of the architecture of the success of this country -- company. this was before there was an iphone, before -- >> he has been in a financial functions in 1996. >> there was a time when that would not happen, and peter would be the one meeting. he would host meetings, and when analyst brought people through he would answer questions for like the time -- for a lengthy amount of time. >> let's put this in perspective. back in 2004, when peter oppenheimer took over, when the ipod was an amazing product of a it was an important job, but did not not i have wondered $59 billion of cash. -- apple did not have $159 billion of cash at that time.
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>> nobody has ever had that kind of cash stash before. he has created lots of ways for them to acquire that cash, not get taxed on that quest, invest that cash in a shell corporation in nevada, just across the border so they could avoid california taxes as well, very clever uses of that cash. he has proven to be very good. and go, timand with cook was in the operation side, the management of inventory. that is one of the untold stories. so many consumer electronic somebodies have not been able to handle growth, they cannot get into the market in time. as cash management as inventory management. >> so what have you heard? >> you have heard that he may
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have been looking to leave as early as two years ago. that isught in this guy going to take over, but before that he was at nokia. n experience in running a global handset operation . the writing is on the wall that oppenheimer was about to -- >> nokia is a much different company than apple. do you get the sense that apple investors have the confidence in maestri to step into oppenheimer's shoes and perform? introducede slowly him to people and have him get some practice in doing this. oppenheimer seems to relish talking to him. >> he was the cfo or general
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motors for europe and brazil. it has not been of one of rating success in europe. >> managing their difficulties has probably been good for him. these are not junior financial roles by any stretch of the imagination. >> failure is good. i will not tell my children that. so now that they're sitting on this cat, they may do something with it? >> how to put it to use, get some share dividend buybacks. that is what carl icahn would want. >> he has not -- do not know much pressure they are putting on apple, but you once again seeing these big changes. everything product wise has changed, and everything about their relationship with their
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shareholders as changed. >> what does he get to take with him? >> i think he will do well for himself. >> we will be back with more just a second. >> we will be talking about insurance companies trying to survive in a zero rate world. the ceo of one of the biggest insurers on that. ♪
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>> this is "market makers." at 10 paying extra close to two janet yellen -- close attention to janet yellen? insurers. they invest their policy premiums mostly in bonds, and the record low interest rates we have been living with are squeezing those interest rates
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painfully so. one of the largest insurers, and a big player in the u.s. robert propertyt -- robert a market. >> they will start ratcheting up. they have been ratcheting up over the past 18 months or so. market rates. we will not see a fast mover rates, because we naturally have to find the right balance between continuous and porting of the economy -- supporting of the economy, and making sure that you take a lot of excess out of the other parts of the market. >> what about in europe? how long do you think it will take before the ecb needs to tighten policy? >> europe is probably somewhat lacking in terms of the pickup in the economy.
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speaking,echnically for the banking industry to recover, and for the industry as a whole to show more sustained economic growth before the ecb starts moving. inflation at this point seems to be higher than those before -- who prefer it. >> how much further behind the u.s. recover the european --overy is in terms of what months? >> is about a growth of three percent for this year, and that is getting close to potential growth. the gap is more years than months. quite how much longer can insurers endure this slow rate environment? it has to be painful. >> having said that, not all
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insurers are in the same position. zurich, we are starting to prepare for a low-interest environment. we came off of it in 2008, we had to make little changes to profitability. we chose to defend it, that was a very strong managing good we have less sensibility to low-interest rates than other countries, which probably will have more challenging times ahead. short interest rates continue to remain where they are. in other words, moving into a japanese scenario. thatarting to dustin and -- infrastructure of real estate. would you take more risk on so-called hard assets if you could? >> as part of my strategy for the economy, considering all of
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the assets, i would take moderately more risk. when you do that, we have also decided to move a part of our liquid assets into lesly quit assets. talking about infrastructure, i --uld dress that the world stressed that the world takes infrastructure loans, and some of the more risky assets modestly increase our quarter. >> how important an issue is climate change for the interest -- insurance industry? >> climate change is an important factor. not just for the insurance is business, but we see that natural capacities that dramatically increased in terms of frequency. also going as increased in terms of severity. we have linked to climate
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change, having to be entirely proven. the severity is also increasing because of the changes in population. if you think about it, at the moment about 50% of all of the world's population lives in cities. 25% of the years, world population will live in big cities. big cities are naturally more on the waterfront, much more exposed to natural catastrophe. storms, hurricanes, and natural catastrophes of this kind of nature increases the severity of the future significant lead. >> have you seen a change in climate have her as a result? the perception of climate change? >> yes. our customers naturally have an inode dialogue with us -- ongoing dialogue with that's. us.
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we have an ongoing dialogue potential catastrophes , that allen will have to be much more contained. >> buying bigger policies? a not just insurance on global basis, and global corporations, they need more value added. understanding these risks and the connectivity of risk much better. >> is that better business for you? >> risk is our business. it is our responsibility to tailored the rights to the customer and the standards, and to show solutions. equally important is to find ways to mitigate those
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resources. it will have corporate and alsorcial cost about but society at large. >> write-offs, some were structuring charges, the past years have been some challenging once. anymore unpleasant surprises? that.o not count optimistice very positions about the next year to come. having taken the challenges, and continuing to serve our customers eric >> the worst is behind you? >> as you mentioned, it has been difficult year for me personally and those in the organization. we are very confident in our discussion of assets.
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? soundingty confident ceo of zürich insurance. it may not strike you as the world's most interesting butstry government -- consumers care deeply. , that is what all garden is hoping for with a new logo. we'll talk with a top branding expert. ♪
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>> welcome back. our favorite italian eatery all of carton is getting a makeover. that darted brand unveiled its new logo, calling it a brand renaissance. how much can a local really improve a brand? here to enter that is dennis ryan, chief creative officer at an ad agency.
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he joins us now from minneapolis. welcome. write down how important is a logo? when tropicana change their logo, people did not like it. are people going to really when they're eating dinner because they do not feel warm and fuzzy about that new branding? >> they are not regulated on the -- and they are not. you hit it on the head. logos are really important, but i do not think it is as important as the packaging change. >> and olive garden's case, what is the possible downside? >> i do not think there is one. the biggest one is expense. you have a chain with over 830 restaurants that we need to redo all of the signage, all of the different materials with the restaurant itself. that is inexpensive undertaking. as far as a downside if i do not think there is any real significant one. >> is the downside is expense,
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what is the upside? >> making a little bit more relevant. fan of their big old one, with purple and green that reminded me of mardi gras, and this random bundle of grapes. cleans an opportunity to that up, give me something that translated better across the social media extensions. they made some improvements. >> dennis, who is sensitive to a logo? -- there are local failed, maybe you can share with us some of the greatest logo fails of all time, why is a logo failed -- i can understand a bit on offense a buddy that is going to be a problem, but how much good can a new local really do? >> food is just like fashion.
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there are trends. frankly covey can get behind a trend. >> i'm not going to give you that. if food is like fashion, i can understand different trends in because it is what i put on my bitody. -- isrden is to the serving food. is it any different if it is serving the same food? of an emblemo the change on the inside. they are serving new food on new plates. changing it up to be more fresh. >> if they really wanted to tgi friday's, if they wanted to change the way we think about them, they need to change on the inside as well. they need to be doing some thing
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with their many, their service, something with the decor, etc.? >> exactly. this logo is the tip of this -- the spear. they're going to be offering curbside service and online ordering. all these are simplified by a new brand logo. at its best it can signal a strong change. that is a little bit where they fall short. i do not think this logo is emblematic of a brand renaissance. >> speaking of logos, i want to introduce into this conversation of oscar talk. pepsi made a lot of that payday become theney to exclusive soft drink sponsor was coke left. coke managed to sneak into the oscars on the cover of a pizza box.
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a tiny little logo on the pizzas that were brought in. to be busy the coke cola lettering on the side of the pizza box. >> i actually noticed it. >> how big a deal is this? >> we all notice it. gos are powerful shorthand, look how little screen space that takes up, but everyone notices it right away. again, it is why gatorade is on the sidelines during football games. you see it in context in venues where you are paying attention, and it registers. t acan pepsi ge refund? they spent $2 billion. i would say what gives? >> you have other people calling
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up and saying what gives, and they do. there definitely negotiations according to the articles i have read. that, is thatike something that could have been prevented? or is it just a happy accident? >> i genuinely believe this is a hack the accident. had people been more aware, they might have noticed it. but alan had her deal with the samsung galaxy, one of the most brilliant product integrations with her world most popular selfie. that was taken on a samsung galaxy phone, or fortunately before the broadcast even started, from her own twitter stream she put one up of her and channing tatum. it is quite clear that the bottom of it said from her i phone. >> she was being authentic then. >> samsung is still a pretty
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sweet phone. >> thank you so much for joining us. >> gives a couple of minutes to talk about the markets? if it is 56 minutes post the hour -- past the hour. >> i'm feeling generous, it's all in the green. >> we're bouncing back from the decline. is dying down other crimeaout a takeover of about president putin saying today he is not planning to annex crimea. europe got hammered yesterday, it to his bouncing back, although certainly not to the degree that we have seen u.s. stocks bounce back. >> we are out of time. back with more in a minute.
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♪ >> alive from bloomberg headquarters in new york, this with erik makers" schatzker and stephanie ruhle. >> three know in dollars -- trillion dollars. the president shows his new budget with tax cuts for families. deal, the ceoin will be joining us to -- a ceo will be join us to show his new currency venture. >> social media is a tool of the new revolution, we will hear from a thought leader who knows
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what the next big thing in business is going to be as it relates to local media. -- social media. >> i am stephanie ruhle. >> i am erik schatzker. it is a big hour on bloomberg television. in 30 minutes we will hear from the president himself as he unveils his 2015 budget from elementary school in washington. we will hear more details about what the president wants in a few minutes. before then, we will take you kiev where secretary of state john kerry is meeting with the ukrainian government. watch his reaction to the comments of president putin. it seems like a de-escalation in the tensions, in crimea in particular. >> the ball is concerned about what is happening there with putin's enintentions?
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's what are vladimir putin intentions and is he being straightforward. for russia and vladimir putin, concern is at times warranted. things are not going anywhere in gridlock washington that the president will lay out the democratic party's priority as they go to the midterm elections. natalie is with us. phil, should we call this a clearly political document? >> so pessimistic. but there is no other way around it. senate democrats say they will not do their own budget this year in their chamber. what this document really is, this year more than ever before in 2014 is it lays out their priorities going into the midterm elections, it talks about income inequality and a lot of the issues the president brought up in his state of the union address, looking to build on those. we will hear a lot of those at 1130. the senate will not take up a budget.
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we have a topline agreement and house republicans are also not -- already not getting involved in this is just a political document. >> the administration change entitlement programs last year -- do i really need to ask whatever happened with that? >> everyone was surprised coming off of the election when in 2012. the administration address social security changes that enraged the democratic base. those are not going to be in here and the basis is why -- they have heard from house democrats that say that this document does not go anywhere, anyway. why are you putting us in trouble by putting issues inherent? the administration has taken them out and administration aides say that if john boehner wants to come to the table and go back to the grand bargain negotiation social security cuts will go back on the table. but until there is something
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there, why put ourselves out there for political risk? >> finally, are there proposals for the administration to get some republican support? that,isanship -- without nothing goes anywhere. >> i think everyone is aware that not a lot will happen on capitol hill this year. we will hear from president obama in about 30 minutes and he will talk about the expansion of the earned income tax credit and they will try to address more low income individuals without children, to double what the current tax credit really is. the earned income tax credit has a lot of republican support on capitol hill. paul ryan, the former vice presidential republican candidate trashed the war on poverty yesterday, talking about how social programs have been a massive failure with cutting back on poverty. one thing that was not mentioned is the earned income tax credit. marco rubio has mentioned something like this.
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you will hear the president talk about that today. this is a political argument dealing with democratic issues but the tax credit is one area where the president will say, this is an olive branch and this is something we can agree on. for agreementpe between republicans and democrats and we don't get much of that these days. >> from the battered heart of the ukraine to the bright lights of the oscars, the fabric of social media weaves through our lives. to help us make sense of it all, founder friend and the of social media production company, the audience. welcome back. >> happy to be back. >> it's get serious, i want to talk about social media and the impact on local movement protests. we saw the role it played in the ukraine. are using social media to bring people out into the streets. the bigthis is on vk,
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russian social media site or twitter or facebook, this is used to rally people into the streets. when you share these poignant images of people protesting in the streets, great before and after photos that people are seeing, it really ignites people of all ages. that is the most important thing. i read a study recently talking about the social media impact, and it is mainly the middle generation of people. they talk about kids and twitter and rallying around some cause. it really brings people of all ages down into the streets. >> i think that people get that wrong, don't you? >> everyone is on the systems now. >> we saw that starting to develop in egypt, does this say something about social media that extends beyond what we see taking place in these political hot sounds.
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that maybe it is growing up? , we use this for entertainment, the oscars. it is about the delivery person and a selfie is the most important stories from the oscars. this is our love of entertaining ourselves in these platforms. but when communication architecture is not as strong, these are lifelines for people. the ideas that they can use the internet and collect -- connect socially, which is important when the government comes in and shuts off phone systems and other modes of communication. they really become a lifeline for these citizens. -- howdoes stabilizing destabilizing is this in countries where they have got -- complete government control? >> in china the great firewall is being overturned by proxy servers. the internet systems -- they are
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decentralized, extracting the old modes of communication. you have the amazing ability to bring people with no centralized -- >> understand the value of social media, you have worked a lot with iceland. why have they woken up and saying that we need oliver luckett in their mix? >> iceland, i see this as a cultural experiment. you have 350,000 citizens and one of the highest penetrations of broadband in the world. they are just now protesting in the streets about the european union. there were 8000 people protesting in wreck of the -- rejovick. they are trying these new experiments and direct democracy. the internet has been proven to take apart centralized institutions.
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are talking about bitcoin later. that is where it started later. of in the traditional modes medication we have alternatives to broadcast television. where propaganda has always been so strong. so this is really opening up new forms of really representation and democracy inside of the society. iceland is one of these places that has embraced that change. >> you advise politicians on the one hand, you advise celebrities on the other hand. it would seem on the surface that there is no similarity between the two. there process level, is -- at the engineering level, is there? do you understand the political side just like you understand the celebrity side? >> this is about a message and getting people to buy into it. and broadcasting that message to themselves. there are tremendous amounts of
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similarities and the concepts thesee take these memes, society kernels of thought and then we then become redistribution of those thoughts. so whether this is the political ideology, just recently i got in a little bit of a rift with a tennessee senator. i was literally flying here, the last time i was here and there was a guy from my high school, actually who had proposed local -- itation to basically was hidden behind the idea of religious freedom. and it was basically to discriminate against homosexuals they wanted to do business with. we saw this in arizona and kansas as well. what we did is we created a meme, the sign that says we refuse service to anyone. we created an image, we refuse to serve politicians or homophobes. and it went viral. by the time that i landed.
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>> there we go. >> by the time i let -- i landed, it had been shared 10,000 times on facebook and had reached 2 million people. >> did you hear from the senator? >> he pulled his name from the bill. >> get out of town. >> the tennessee government defeated the bill immediately. if you read the headlines it is because of external pressure. >> i wonder where that came from. that is great, oliver, good for you. social media, not just for sexy selfies. he will be sticking around with us. coming up, a big announcement for bitcoin. -- willof rock chain be here. you are watching bloomberg
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. ♪
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>> first, bloomberg.
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>> welcome back to "market am ruhle. a big day for disney and abc -- they have a new deal to show espn and abc over the web. is a was -- this controversial technology called autohop, which will be available until days after the original broadcast. tbs will put more -- more commercials on old shows. cbs will putear -- more commercials on old shows. nbc already use so-called dynamic advertising. facebook is in talks to buy a drum company, according to the .ebsite techcrunch they will use this to bring wireless internet the parts of the world that don't have it starting with africa. they make solar powered drones
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that can fly for five years without landing. >> five years. >> they have to do this after missing the market so badly at the oscars. >> big news to make a here on bloomberg television. n, as the ceo of blockchai digital place to store your virtual currency. he joins us from london. news?what is the >> thank you so much for having me. oliver, great to meet you. we have a special announcement. we have conducted our second acquisition in 10 weeks. we have partnered with clark bitcoinne of the first adopters. he started building charts a few years ago and recently dabbled in a high-performance trading platform. we have made this acquisition 100% in bitcoin, we are very
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excited to announce that we will be merging the -- real time trading platform into the world's most popular iphone and ipad app, zeroblock. for enthusiasts, this is exciting news. able to dou this cheaper than you could have before, with the recent issues with bitcoin? >> we do the acquisitions a few weeks ago. we don't worry about price fluctuations on a day-to-day basis. is inne at block chain for the long haul. >> what is the name of the company? tbtc, real-time bitcoin trading. it allows traders to buy and sell bitcoin. we will implement a real-time newsfeed into the platform. it launched in 2013 in june and it has traded $150 million in
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transactions. >> you mentioned the transaction is taking place in bitcoin. you, hows well ask many bitcoin? are exclusiveils but we all -- we do all of our transactions in bitcoin. >> we have been trying to get our head around how big that this business is. we know how much that mount has have a number but give us an idea of how big this deal is? >> these deals are getting bigger because there is so much innovation happening in this space. tools forited to have traders who deserve professional level service and that is one thing you will see coming from us. >> when you are doing these transactions in bitcoin, and you are setting a certain value, i assume that yesterday -- now that the price has bounced back, you see a lot of volatility right now.
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explain a little bit about how you are valuing this in bitcoin. the currency or is this purely bitcoin? thee do value it against currency today and the terms of the deals being structured provide a little insurance against any form of volatility, just if you were to buy a company in euros. we may do several different payments over a. justme -- period of time in case people are uncomfortable. bitcoin,ery bullish on it is i think it is one of these great decentralized opportunities. if you look back at paypal in 1999, it had a lot of the same problems. i would like to understand from you, what are the problems that you think needs solving right now in this business, to make it a little bit more palatable to risk averse people. he just liked you on facebook. >> that is a really wonderful
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question. i think the challenge this year is for everyone in bitcoin to build beautiful software. everyone uses e-mail but don't understand how it worked under the cover. they use that because they understand it helps them send messages to everyone in the world, for free and that is the promise of bitcoin. the 1900s when henry ford invented the car, a lot of people did not know how to drive yet and there were no off ramps or on reps or highways. that is happening in bitcoin a little bit. and weare getting better are building amazing services and products to re-create a financial industry that is in desperate need of innovation. people say there is strong and his potential in all areoin world, but now you -- there is strong potential in but youitcoin world are moving from this and other
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currencies, is this right? zeroblock willnd be the front for many exchanges, our company will never touch -- you may have trading platforms on top of nasdaq or the new york stock exchange, brokers use those services. >> this is kind of like a trading aggregator, does that make sense? >> like a consolidated order book. >> where is the financial opportunity? the real value is in the underlying trading prep or -- platform. how do you make money? >> you have instant news and also do trading. that is what we are involved with as well. also do trading, but we have a platform that is not an aggregator. is it the idea that you can bring a number of the coin-related services under one roof? that is definitely what we do here at bloomberg because there are so many ways of values being
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added, in one place, people may do more business with you than they may want to do with a single-service provider on his own? >> you could definitely say that. when we launch more and more ck,hanges on zeroblo institutional traders will be able to visit and trade across any exchange and we will support mobile trading on zero block, the most popular android app for bitcoin. >> i wanted to ask, explain to me why you have been having trouble with apple lately. explain to us a little bit about what happened to the app in the app store? >> that was a setback of three weeks ago but it was not that unanticipated. hostiles taken a fairly stance against bitcoin services so far, they don't want people to send or receive bitcoins. information services like zero
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block are ok. we are building a world-class team to support this platform. cary.ank you, nick from >> we are waiting to hear from secretary of state john kerry, where he has promised the government a billion dollars in loan guarantees. stay with us. inrket makers" will be back just a moment, you are watching bloomberg television. ♪
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>> president obama his budget to capitol hill. so lawmakers will not have to go through those big-budget books before they start criticizing.
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we are so cynical today. we are waiting to hear from the president himself. john kerry, the secretary of state will be speaking as well. we will go to him in a few moments. ♪
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>> the secretary of state, john kerry is speaking live in kiev. he has just finished his meeting with ukrainian government. let's listen in. >> he came back here, and he was determined to live as he had seen other people live in parts of the world. moving, and it gave me a deep personal sense of how closely linked the people of the ukraine are, not just to americans but to people all across the world, who today are asking for their rights, asking for the privilege to be able to nation,fining their own
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defining their future. that is what this is about. the united states extends our deepest condolences to those whose grief is still very fresh. ones,ose who lost loved who bravely battled against snipers on rooftops, and people armed against them with weapons they never dreamed of having. ukrainians took to the streets to stand peacefully against tyranny. and to demand a mock receipt. so instead, they were met with snipers. who picked them off, one after the other, as people of courage, notwithstanding the bullets went out to get them, drag them to safety and gave them comfort, exposing themselves. they raised their voices for dignity, and for freedom. but what they stood for, so greatly, i say with full
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conviction, will never be stolen by bullets, or by invasions. it cannot be silenced by thugs from rooftops, it is universal and unmistakable. it is called freedom. so today in another part of this country, we are in a new phase of this struggle for freedom. and the united states reaffirms our commitment to the ukraine's sovereignty, and territorial integrity, according to international law. we condemn the russian federation's act of aggression, and we have throughout this evidence of a great transformation taking place and in that transformation, we will stand with the people of the ukraine. today, ukrainians are demanding a government with the consent of the people.
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and i have to say, that we all greatly admire the restraint that the transitional government has shown as it makes this transition. they have shown restraint. invasion of the ukrainian homeland, and the russian government that has chosen aggression and intimidation as a first resort. the contrast really could not be clearer. determined ukrainians demonstrating strength through unity, and the russian excuses,t out of hiding its hand behind falsehoods, intimidation, and provocations. in the hearts of the ukrainians in the eyes of the world, there is nothing strong about what russia is doing.
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it is time to set the record straight. the russian government would have you believe that it was the opposition who failed to implement the february 21 agreement that called for a peaceful transition. ignoring the reality that it was historych, who, when came calling and his country was was the when this city place where the action was and the leaders of the nation were together to decide the future, he broke his obligation to sign that agreement, and he fled into the night, with his possessions, destroying papers behind him. he abandoned his people. and eventually, his country. the russian government would have you believe that the somehowgovernment is illegitimate. or led by extremists, ignoring the reality that -- representing
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ukraine, the the elected representatives of the people of ukraine, they overwhelmingly approve the new government, even with members of party deserting him, and voting overwhelmingly to approve this new government. it was thanks in part to the ych's ownm yanuckov party that the future of the ukraine changed. most, this is the representative institution in the ukraine. the russian government would also have you believe that the calm and friendly streets, one of which i walked down, but many of which i just drove through, that somehow these streets of kiev are actually dangerous. ignoring the reality that there has been no surge in crime, no surge in looting, no political
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retribution here. government would have you believe against all of the evidence that there have been mass defections of thatnians to russia, or there have been mass attacks on churches in the eastern ukraine. that hasn't happened either. they would have you believe that ethnic russians and russian bases are threatened. they would have you believe that kiev is trying to destabilize crimea or that russian accents -- actions are legitimate because crimean leaders invited intervention. as everyone knows, the soldiers crimea, at the instructions of their government has stood their ground but not fired a shot or issued one provocation, and have been surrounded by an invading group -- have seen an
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individual who got three percent of the vote installed as the so-called leader by the russians. they would have you believe that kiev is trying to destabilize crimea, or that somehow russian leaders invited intervention. piece of credible evidence supports any one of these claims. none. and the larger point is really this. diplomacy and respect for sovereignty, not unilateral force, that can best solve disputes like this in the 21st century. president obama and i want to make it clear to russia and to everyone in the world that we are not seeking confrontation.
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there is a better way for russia to pursue its legitimate interests in the ukraine. if you were legitimately worried about some of your citizens, then go to the government. talk to them about it. go to the united nations and raise the issue with the security council. go to the osce. raise this with one of the human rights organizations. that are countless outlets in an organized, structured, decent world have struggled to put together to resolve these differences so we don't see a nation unilaterally invade another nation. there is a better way for russia to pursue its legitimate interests in the ukraine. russia can choose to comply with international law, and honor its commitments under the helsinki final act under the united nations charter. if it wants to help detect
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ethnic russians, as it purports threatened,hey were we would support efforts to protect them, as would, i am told, the government of the ukraine. but if they want to do that, russia could work with the legitimate government of the ukraine, which they have pledged to do. permit, but must encourage international monitors to deploy throughout the ukraine. these are the people that can actually identify legitimate threats. and we are asking together with the government of the ukraine, together with the european communities, for large numbers of observers to be able to come in here, and monitor the situation, and be the arbiters of truth versus fiction. they wanted to help de-escalate the situation, could return their troops to the
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1990 --, live by the 1997 base agreement and de-escalate rather than expand their invasion. we would prefer that and i come in today at the instruction of president obama to make it absolutely clear, the united states of america would prefer to see this be escalated -- be calated,d -- dees through international institutions that we have worked many years -- in order to deal with this kind of crisis. but if russia does not choose to alate, if they will not work with the government of the ukraine as we hoped they will be, our partners will have no choice but to join us and expand upon the steps we have taken in recent days to isolate russia,
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politically, diplomatically, and economically. i wouldn't the size to -- -- i would emphasize to >> this is president obama with his new three dollars trillion budget -- $3 trillion budget proposal, with a focus on job proposals and low incomes to -- low income tax rates, with a proposal to raise taxes on the wealthy by $3 billion. >> the children i was with a moment ago about eating able to succeed in america. these children may not be the most excited children in town -- people in town by budget day, but this was designed with their generation and future generations in mind. in my state of the union address i laid out an agenda to restore opportunity for all people. that nod the principle
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matter who you are or where you started, you can make it if you try here in america. this agenda is built on four parts. wages,od jobs, good aching sure that we are training workers with the skills that they need to get those good jobs, guaranteeing every child access to a world-class education, and making sure that our economy is one in which hard work is rewarded. the budget i sent congress this thisng will implement agenda in a balanced and responsible way. this is a roadmap for creating jobs with opportunity for all americans. at a time when the deficit is cut in half this allows us to meet our obligations to future generations without leaving them a mountain of debt. to the balance in congress but it also builds up on that progress with what we are calling an opportunity, growth and security initiative,
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that invests in our economic priorities in a smart way that is paid for with smart spending cuts and closing tax loopholes that right now only benefit the well-off and the well-connected. i will give you an example. right now the tax system provides benefits to wealthy individuals who save after they have amassed multimillion dollar retirement accounts. by closing that loophole we can help create jobs and grow the economy, and expand opportunity without adding a dime to the deficit. we know that the country that wins the race for new technologies will win new jobs so this creates 45 high-tech manufacturing hubs where universities and businesses will work for groundbreaking technology for new jobs in america. part of the reason we're here today is because education has to start at the earliest possible ages. this budget expands access to the kind of high quality preschool and other learning
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programs to give all of our children the same kind of opportunities that those wonderful children that we just saw are getting right here. we know that well not all of today's good jobs are going to require a college degree, more and more of them are going to require some form of higher education or specialized training, so this expense apprenticeships for more ready to work americans to have jobs. and we know that future generations will continue to deal with the effects of a warming planet. this budget proposes a smarter way to address the cost of wildfires, including over $1 billion in new funding for new technology to help companies prepare for a changing climate today and set up the incentive to build smarter and more resilient infrastructure. we also know that the most and historically bipartisan way to reduce poverty
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and help hard-working families pull themselves up is the earned income tax credit. right now this helps about half of all parents at some point in their lives. this budget gives millions of more workers the opportunity to take advantage of the tax credit and it days for it -- pays for the loophole where wealthy individuals classify themselves as a small business to avoid paying their fair share of taxes. this budget will also continue to put our fiscal house in order over the long-term, not by putting the burden on the folks who can least afford it, but by reforming the tax code and the immigration system and building on the process that we have made for health care costs over the affordable care act. and it puts the debt on the downward path, as a share of the overall economy, which in -- independent experts have said is a target for fiscal responsibility. our budget is about choices.
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it is about our values. as a country we have to make a decision if we are going to protect tax breaks for the wealthiest americans or make the smart investments to create jobs and grow the economy and expand opportunity for every american. at a time when deficits are falling at the fastest rate in 60 years, we have to decide if we will keep squeezing the middle class or if we will continue to reduce the deficits responsible as we take steps to grow and strengthen the middle class. the american people have made it clear time and again, which -- whichthey are approach they prefer. this is the budget i offer, and that is what i will offer it in my years as president. thank you very much, everybody. >> do you have any more on 's presst putin conference, has he lost touch with reality and have you spoken to him?
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>> i have not spoken to him since i spoke to him this past weekend but me and my national security team have been watching the events unfold closely, and i met with them again today. as many of you know, john kerry is in kiev as we speak at my direction and is expressing my full support for the ukrainian people. over the last several weeks we have been working with our partners and the international monetary fund to build international support for a package that helps to stabilize the ukraine's economy and we have a package of our own to support the ukraine's economy and provide in the technical assistance that they need. this includes a plan to loan guarantee package of $1 billion immediate technical expertise to the ukraine to andir their economy assistance to help them plan for
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elections that will be coming up very soon. as i said yesterday, it is important that congress stand with us, i don't doubt the bipartisan concerns that have been expressed about the situation in the ukraine, there is something that they can immediately do and that is to help finance the package -- they can help stabilize the ukraine and make sure that fair and free elections take place very soon and as a consequence help to de-escalate the crisis. in the meantime we are consulting with our international allies across the board, together, the international community has condemned russia's violation of the territorial integrity and sovereignty of the ukraine. we have condemned their intervention in crimea and we are calling for the de-escalation of the situation in monitors that can go into the country right away.
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overall we believe the ukrainian people should be able to decide their own future, which is why the world should be focused on helping them stabilize the situation, economically, and move forward to fair and free elections that are scheduled to take place in may. there have been some reports that president putin is pausing for a moment and reflecting on what has happened. i think that we have all seen that from the perspective of the european union, the united states, allies like canada and japan, allies and friends and partners across the world, there is the strong believe that russia's actions violate international law. i know that president putin seems to have a different set of lawyers making a different set of interpretations but i don't think that that is fooling anybody. i think everybody recognizes that although russia has
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legitimate interests, in what happens in the neighboring states, that does not give them the right to use force, as a means of exerting influence inside of that state. fact,e said that if, in there is any evidence out there that russian speakers or russian natives, or russian nationals are in any way being threatened, there are ways of dealing with that through international mechanisms. and we are prepared to make sure that the rights of all ukrainians are upheld, and in fact in the conversations we have had with the government in kiev, they have been more than willing to work with the international community and with russia. to provide such assurances. so the fact that we are still seeing soldiers out of their , is ans, in crimea indication to which what is happening there is not based on actual concern for russian
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speakers, or russian inside of the ukraine but is based on russia seeking, through force, to exert influence on a neighboring country. that is not how international law is supposed to operate. note, the way that some of this has been reported, that there are suggestions that somehow, the russian actions have been clever, strategically, this is not a sign of strength but rather, is a countries near russia have deep concerns and suspicions about this kind of meddling and if anything it will push many countries further away from russia. there is the ability for the ukraine to be a friend of the west, and a friend of russia as
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long as none of us are inside the ukraine, trying to meddle and intervene, certainly not militarily with decisions that belong to the human -- ukrainian people. will be speaking to this during his visit and i will make calls today to some of our key foreign partners and i suspect i will be doing that all week and him through the weekend. as i stated yesterday, the course of history is for people to want to be free to make their own decisions about their own futures. and the international community, i think, is unified in believing the role of an outside force where there has been no evidence of serious violence, where there is no evidence of -- no rationale
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under international law, to intervene and people have their own investments. we stand on the side of history, but i think more and more people of the world deeply believe in. the principle that a sovereign people, and independent people are able to make their own decisions about their own lives. mr. putin can throw a lot of words out there, but the facts on the ground indicate that right now, he is not abiding by that principle. there is still the opportunity for russia to do so. working with the international community to help stabilize the situation. and we send a clear message that we are prepared to work with anybody if they're genuine interest is in making sure that the ukraine is able to govern itself. and as i indicated before, something that has not been emphasized enough, they are currently scheduled to have elections in may.
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everyone in the international community should be invested in making sure that the economic deterioration in the ukraine stops, but that these elections are perceived in a fair and free ukrainians, all including russian speakers inside of the ukraine are able to express their choice of who should lead. andif we have a strong robust and legitimate election, then there should not be any question as to whether the ukrainian people govern themselves. without the kind of outside interference that we have seen russia exert. all right? thank you very much, everybody. president, the talking about his budget proposal, and also about answering questions from reporters about the ukraine. experts,ing in our
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al and peter. peter, let's start with you. us talk about what we learn from president john kerry, who is in the ukraine right now. >> this was a one-to punch, tough rhetoric in condemning the russian action and an off ramp for vladimir putin if he wants to walk back this crisis. we have seen the harm to the russian economy and the president delivering that message, the secretary of state also saying there is a chance to go to the u.n., and you go to other international organizations to reach some consensus. betweenciliation vladimir putin and the russian interests. if it does not happen, pretty strong words from john kerry on the efforts to isolate russia. we had the billion-dollar loan guarantee coming from the u.s. assistancetechnical and the u.s. promises more aid
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for the ukraine going forward. >> peter, is there any sense about whether the rest of the international community, the west and the g8 are prepared to on theth america, specific issue of these consequences? >> it is not entirely clear. we have not seen the same level of consensus in regard to everyone in the european union stepping up with the threat of sanctions. and using the kind of rhetoric that we have heard from the president and the secretary of state. obviously, europe has a lot more at stake here than the united states given their economic ties with the united states and russia. so far they are talking from the same playbook but they are not necessarily on the same page. that is something vladimir putin makes blood going forward. that is something we will watch carefully. -- that is something vladimir putin is doing that we will watch going forward.
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it is something we will watch carefully. us the --give highlights. >> he gave those remarks about the budget today, that were leased at 11:30 washington time -- released at 11:30 washington time. this was education and jobs training programs, and to pay for what we saw -- were cuts to crop insurance subsidies. this is something that we don't always see. he is going for carried interest tax, which is supported by the top republicans on capitol hill, dave camp. he was trying to lay out the democratic points as we go through the 2014 oh election. interesting to look at and something i picked up that i thought was interesting, look at the deficit and the gdp ratio in the years ahead. that taking into account the entire budget will be put
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into play. this is not the case and people on both sides say that this is the case. you see the numbers going down 2.3%, the budget to gdp ratio is at precrisis levels. to gdp -- and this goes down $13 billion. nobody expects this budget to be put into place but projections are moving down on the deficit, which is why you see a president who is willing to go out there and talk about new spending ther years when the -- all talk in washington is about cuts. >> thank you, phil mattingly and peter cook, with the latest about the president and the secretary of state. >> we want to make sure we get a final few thoughts with oliver leavitt, who has a big week coming up. day.onal detox t >> national unplug day.
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i have been working with arianne huffington and i learned something interesting about our constant connections. morning,wake up in the and you start looking at your e-mail and your constantly connected, you have all these other emotions coming into your daily life that have created anxiety. on march 7, we are kicking off day,national unplugging digital detox. on the seventh, we will all be unplugging. >> isn't this bad for your vision? this is like a banker saying, don't do any banking. >> of course. this is terrible. >> maybe you realize how much that you miss this. >> there you go. i, myself wrote about this two weeks ago. this is hard to do. this is almost an addiction. >> what was your take away?
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>> i enjoyed the people around me a lot more when i am not constantly thinking of something else. you are a lot more present when you don't have all of these external influences coming into your life. when you think about it, you are sitting there at dinner and looking at your phone, and then you get a negative e-mail, the person ahead of you has no idea what is going through your head and this creates the awkward moments we are all starting to look at. >> you participated in digital detox. what was the media that you missed the most? >> i loved the internet. i was wanting to constantly see, facebook and twitter. you want to know what is going on around you and we are voracious consumers of information. that was really the hardest for me. >> do we need to start doing more of this about the amount of time that we spend, constantly looking at screens? >> yes.
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to do ase starting well as parity those behaviors we are doing, the selfie song, that is part of the behavior of people's devices that becomes offensive or absurd. i think we all need to take a check and look at ourselves. >> oliver, thank you. could say hehe really missed calling you on his cell phone, he really missed the internet. oliver luckett. goy with us, we are about to markets.aker-- on the ♪ . .
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>> welcome to "lunch money" where we tie together the best stories, interviews and videos in business news. in for adamr johnson. it is showtime in geneva -- europe loss against carmakers are there high-tech wheels in the alps. and in the east, breakfast at starbucks -- the world largest chain adds a vegetable and egg sandwich. some light reading on capitol hill -- we will help you cut drew president obama's budget plan. and today luxury -- is richard